Honda’s new pricing strategy makes City cheaper by Rs50,000

Honda’s new pricing strategy makes City cheaper by Rs50,000

New Delhi: Honda Siel Cars India (HSCI) has introduced a new and cheaper variant of its flagship City sedan to boost demand for the model, persisting with its strategy of offering its cars at lower prices in India.

“We did not cut price, but introduced a new variant to make the city more affordable," marketing director Seki Inaba said. “We have extended the range of City, which would be available in five variants now."

The new City variant will be cheaper by at least 50, 000 than the existing City line-up and will start with a showroom price of 6.99 lakh in Delhi. Its top-end variant with a sunroof will be available at 10.22 lakh.

In June, Honda reduced the price of its City models by at least 60,000. In August, it reduced the price of its premium Jazz hatchback by at least .65 lakh. Jazz is now available at 5.50 lakh.

Most other car makers including Maruti Suzuki India Ltd, Hyundai Motor India Ltd, General Motors and Toyota Kirloskar Motor India Pvt. Ltd have said that they will increase prices of their model from January onwards.

“This move was unexpected because yen has appreciated 30% in the last nine months against the rupee, making component imports costlier," said Nikhil Deshpande, research analyst at brokerage Pinc Research.

The company produces about 50,000 cars a year at its Noida plant on the outskirts of Delhi but imports key components from Japan and Thailand.

The new pricing strategy will not affect company’s margins as it has started focusing on localisation, said a company official.

“Localisation levels at our plant have gone up in recent times, “ said Jnaneswar Sen, senior vice-president, sales and marketing, HSCI. “Jazz and City share a lot of common components and we have started making those components in India rather than depending on imports. Besides, we have also started sourcing components from local vendors here."

The company said bookings for the new City have started but deliveries will begin only in January as there are some supply-related concerns due to floods in Thailand. “Due to a shortage of components, our production has been curtailed," said Inaba of HSCI. “We should be able to start delivering City from January onwards."